The words "free" and "Xbox 360" are like J.D. Salinger and a gaggle of paparazzi -- never seen together. Still, Popular Science just invoked them with this curious bit of homebrew trickery that might (and having not tested it, I stress might) save you the $100 Microsoft hoodwinks consumers to pony up for its vanilla Xbox 360 USB wireless adapter.
It only costs you the spare router you might (and I once more stress might) happen to have lying around. If not, the article aptly suggests you can pick something up for $15 to $50 between spots like eBay and Amazon, which is more in line with what you'd pay for a reasonably priced third-party USB wireless adapter for a desktop or laptop. Assuming your cheap-o router's supported (there's a list) all you have to do is flash it with this tool (called DD-WRT) and presto, retire-that-mile-long-ethernet-cable-o!
Of course, if you already have an extra wireless router, you could just bridge it to your network, plug the 360 in with the same bit of abbreviated RJ45 cabling, and accomplish the same thing (well, assuming the boxes speak the same lingo). If I understand what the DD-WRT utility adds here, it's the "allowing disparate wireless routers with Broadcom or Atheros chip reference design[s] to bridge with each other" bit.